LETTERS: AMID the coronavirus pandemic, trade, travel and commerce have halted while xenophobia and geopolitical tensions have heightened.
Will this eventually cause global depression and will it end globalisation?
The world economy is badly hit. It is a lot worse than a traditional war, financial crisis and recession.
In a regular war, there are still demand and supplies are still moving.
The coronavirus has created a “non-movement” phenomenon. I call it Economic Coma, putting everything on sleep mode. The world has never had the experience to deal with this situation.
Looking forward, there is nothing in sight. The United States of America ,for example, leads the world in the number of infections and soon, in the number of deaths.
At this time, 10million Americans have filed for unemployment and a record number of businesses are filing for bankruptcy. No one could have imagined this happening to the largest economy in the world.
Malaysia has the highest infection rate in South east Asia. The country has suffered quite badly, particularly the SME’s and the lower income groups.
Recently I read an article from the Special Investment Advisor to the Penang Chief Minister. There are some facts that need to be corrected.
FIRST, “Our two biggest customers, USA and China are not in lockdown.”
There are different types and degrees of lockdowns. I have operations in the USA and China. In the USA, there is a lockdown for manufacturing operations with exemptions (with approval) for “essential products”.
Each country defines this differently. Typically ,manufacturing of medical and pharmaceutical products is exempted.
In China, some parts of the country have been declared open. For example, my operations in the province of Canton are open.
However, since we resumed operations one week ago, less than 10 per cent of the staff showed up. There are various reasons, including fear, lack of transportation, family concerns, etc. I believe China will still take a while to get back to normal.
SECOND, “Prolonged lockdown in Malaysia will see our supply chain being replaced by countries such as China, South Korea, Taiwan and Singapore.”
Industry leaders know it is not easy to replace suppliers, especially during this period of time. It takes months, if not longer, to replace suppliers, due to qualification process and documentation requirements of ISO and our customers.
Besides, most of these countries are struggling with their own challenges.
THIRD, “We are not short of orders, at least not at this time. Our biggest problem is we are unable to produce enough products to fulfil the existing orders.”
The biggest bottlenecks now are material supplies and human resources. We were approved to operate at a reduced capacity, we were (and still are) faced with the issue of preferential treatment. Those who are chosen to work prefer to stay home and enjoy the same salary and benefits. In our case, my company has issued daily subsidies, free meals and transportation to those who come to work, thus increasing our costs which we have to absorb.
There is a balance between health and economy. Both are like running marathons. We need to look at the whole situation with a more scientific approach instead of assumptions and speculations.
One would assume that industries love to open up all operations of a factory and start to manufacture products for revenue.
I do not think that for two reasons. I care about the long-term impact on the morale of our employees.
Secondly, people are fearful and worrisome. The short term gain may have long-lasting adverse effects to the health and longevity of our company.
I am in favour of extending the MCO after April 14 and pay particular attention to the infection and death rates.
A modified MCO may be appropriate depending on the infection rates and the geographical locations of each individual state.
My worst fear is that we might see a spike after relaxation. Then what do we do? We would have lost even more. By April 14,the whole country would have invested tremendous resources and experienced personal inconveniences.
For anyone to suggest that we are now ready to gamble is irresponsible, and not wise.
KELVIN KIEW
Chairman,
Mini-Circuits Technologies